Oh, shit! And that, ladies and gentlemen, is yet another reason why you don't torture people. Suddenly, any "evidence" that you gain through it is no good! Isn't that crazy? Whoops....
The US military gave no reason for its decision.
But lawyers for the defendant say they believe the charges were dropped because he "was tortured" under interrogation.
In 2006, he recanted accusations he had made against fellow detainees of having links to al-Qaeda.
His lawyer told Time magazine the statements had been extracted under torture. The Saudi was reportedly submitted to stress positions, sleep deprivation and humiliation at Guantanamo.
Officials said he had been subjected to a harsh interrogation authorised by former US Defence Secretary Donald Rumsfeld.
But wait, there's more!
The decision could have implications for the other five suspects, whose lawyers claim that similar treatment was meted out to them, the BBC's Adam Brookes reports from Washington.
The five suspects still facing trial at Guantanamo include the alleged mastermind of the plot, Khalid Sheikh Mohammed.
Khalid Sheikh Mohammed is a bona-fide Super Terrorist. Just look at him:
Isn't he nasty looking? Just look at all the things he admitted to under "questioning":
1. The 1993 bombing of the World Trade Center in New York City that killed six people and injured more than 1,000.
2. The 11 September 2001 attacks on the World Trade Center and the Pentagon in Washington using four hijacked commercial airliners. Nearly 3,000 people were killed.
3. A failed "shoe bomber" operation to bring down two US commercial airliners.
4. The October 2002 attack in Kuwait that killed two US soldiers.
5. The nightclub bombing in Bali, Indonesia that killed 202 people.
6. A plan for a "second wave" of attacks on major US landmarks after 9/11 attacks. Alleged targets included the Library Tower in Los Angeles, the Sears Tower in Chicago, the Plaza Bank building in Seattle and the Empire State Building in New York.
7. Plots to attack oil tankers and US naval ships in the Straits of Hormuz, the Straits of Gibraltar and in Singapore.
8. A plan to blow up the Panama Canal.
9. Plans to assassinate former US presidents including Jimmy Carter.
10. A plot to blow up suspension bridges in New York.
11. A plan to destroy the Sears Tower in Chicago by burning fuel trucks beneath or around it.
12. Plans to "destroy" Heathrow Airport, Canary Wharf and Big Ben in London.
13. A planned attack on "many" nightclubs in Thailand targeting US and British
14. A plot targeting the New York Stock Exchange and other US financial targets after 9/11.
15. A plan to destroy buildings in Elat, Israel, by using planes flying from Saudi Arabia.
16. Plans to destroy US embassies in Indonesia, Australia and Japan.
17. Plots to destroy Israeli embassies in India, Azerbaijan, the Philippines and Australia.
18. Surveying and financing an attack on an Israeli El-Al flight from Bangkok.
19. Sending several "mujahideen" into Israel to survey "strategic targets" with the
intention of attacking them.
20. The November 2002 suicide bombing of a hotel in Mombasa, Kenya, frequented by Israelis. At least 14 people were killed.
21. The failed attempt to shoot down an Israeli passenger jet leaving Mombasa airport with a surface-to-air missile on the same day as the hotel bombing.
22. Plans to attack US targets in South Korea, such as US military bases and nightclubs frequented by US soldiers.
23. Providing financial support for a plan to attack US, British and Jewish targets in Turkey.
24. Surveillance of US nuclear power plants in order to attack them.
25. A plot to attack Nato's headquarters in Europe.
26. Planning and surveillance in a 1995 plan (the "Bojinka Operation") to bomb 12 American passenger jets, most on trans-Pacific Ocean routes.
27. The planned assassination attempt against then-US President Bill Clinton during a mid-1990s trip to the Philippines.
28. "Shared responsibility" for a plot to kill Pope John Paul II while he visited the Philippines.
29. Plans to assassinate Pakistani President Pervez Musharraf.
30. An attempt to attack a US oil company in Sumatra, Indonesia, "owned by the Jewish former [US] Secretary of State Henry Kissinger".
31. The beheading of Wall Street Journal reporter Daniel Pearl, who was kidnapped in Pakistan in January 2002 while researching Islamist militancy.
Wow, it's a good thing they caught him and stopped his reign of terror! Except....the "questioning" may have included a little torturing, possibly nullifying his confession. Ruh-roh!
Isn't the Bush administration brilliant?
UPDATE: Well, it seems KSM is hell-bent on getting the death penalty, so maybe this won't be as much of an issue.